You may remember Ambassador Jacobson’s “70 year old Grandma” speech on October 18, 2011:
“When I read all of this I was concerned. So last week I called the Commissioner of the United States Internal Revenue Service to see what we could do. I explained the problem to him.
The result is that both he and I are sympathetic to the concerns. We are going to work together to see if we can’t find a way to accommodate grandma — and others — here in Canada. But we have to figure out a way to do it without letting the person who is trying to evade taxes in the Cayman Islands off the hook.
My message on this one is to sit tight. We are not unreasonable. We are not unsympathetic. We are not irresponsible.”
Tonight, November 2, Ambassador Jacobson provides responsible education about the U.S. electoral system on the Agenda.
Update – November 3:
1. According to the Agenda you should be able to see the interview online.
2. The comments on this post are directed to the continuing disappointment and betrayal that U.S. citizens abroad feel at the hands of the US government. Specifically how Ambassador Jacobson promised relief and clarity. Relief in the sense that US citizens abroad should NOT be subjected to massive penalties for “footfaults”. Clarity in the sense that direction would be provided in terms of how to come into compliance. I wrote a number of posts last year on the topic of how US citizens abroad cam come into compliance with US tax laws. It has since become clear that the IRS is not offering any reasonable way to come into compliance. Furthermore, the silence of the IRS and failure to address this issue suggests that the IRS would rather operate through threats of penalties. The September 1, 2012 guidelines are useful to such a small percentage of people that they are meaningless. US citizens abroad now fall into one of two groups. They either renounce US citizenship or they do the full ostrich. On a personal level I have simply come to terms with the fact that the Government of the United States as represented by the IRS is:
Unreasonable, unsympathetic and irresponsible.
The worst thing is the realization that many of the things we believed about the United States – “land of the free and home of the brave” – are just simply wrong. Margaret Thatcher used to refer to the United States as “That great citadel of freedom and justice“. Right, this is a country that levies huge penalties on US citizens abroad who invest in Canadian mutual funds.
Lioness, comments on the penalties she has received from the IRS. I note that she was using a US based CPA firm. The more I learn about the experiences of people using US based professionals, the more I think you should consider using professionals in your country of residence. See the following comment thread from here to here on this topic.
Finally, don’t forget about one of Ambassador Jacobson’s 70 year old Grandmas.
And, thanks to Calgary411 for your great comments on this post.
There are times in life when bad things happen to good people!
*Lioness You rock. Remember, the IRS have no way to collect fines of any sort from Canadians.
When you walk through a storm
Hold your chin up high
And don’t be afraid of the dark…….
……Walk on, walk on with hope in your heart,
And you’ll never walk alone,
You’ll never walk alone.
@lioness
Welcome to IBS.
You have most likely come to the same conclusion as I have that professional Accountants here in Canada are somewhat less educated in the IRS process than they lead us to believe…or we give them credit for.
Not sure if you looked over your returns before she sent them in (your Accountant), but it seems to me you must have had RESPs or TFSAs with which they might have failed to file….or filed late late…the infamous 3520/3520a forms.
I only say this as you made reference to getting a penalty for failure to file equal to $10,000 or 35% …this is the IRC 6677, article 26 which seems to relate to those type of filings.
My friend is looking at an 80k penalty right now…but the good news is, (if there is any) once you speak to a `human`on the other end of the phone (as these penalties are computer generated) a satisfactory solution can usually be met.
Good luck and keep us posted…..
*@lioness, further to what Mach73 is saying, if these penalties are due to late filing of 3520/3520A forms for TFSA or RESPs, there has been a system wide problem with penalty letters being erroneously sent. Someone posted a link on here back in September about a letter from the American Institute of Certified Professional Accountants to the IRS about this problem. The letter can be found here
http://www.aicpa.org/Advocacy/Tax/TrustEstateGift/DownloadableDocuments/Trust%20Advocacy%20Documents/aicpa_comments_on_incorrect_letters_%203520_82812_submitted.pdf
On the Serbinski Tax forum, quite a few people have been through this problem of penalty letters over these forms and have been able to resolve the problem with several phone calls and letters.
Good Luck.
@lioness
Welcome!
I am a USC who came to Canada as a child and my husband, born in Canada is a USC through his American father. Learning of our tax filing obligations, we entered the 2011 OVDI. Approaching a year from that date, we”ve yet to hear a word from the IRS. We have however talked to TAS and are now optimistic that the penalty on the capital gain tax we incurred on the sale of our principal residence in Canada in 2008 can be eliminated (an reimbursed) through the Internal Revenue Manual’s ‘First time penalty abatement’ provisions. To our surprise, the TAS agent we talked to said that they are negotiating these mitigating provisions within OVDI. In a rather unorthodox move, and with our lawyer’s approval, we included what might be considered a reasonable cause letter with our OVDI submission. The US government has been recklessly negligent in its duties to inform its citizens of its tax filing obligations and noe wants to offload the responsibility to banks and foreign governments through FATCA. This is shameful. (@all, please excuse all typos, as I am on my iPhone for now and typing sux!)
http://thetaxtimes.blogspot.com/2012/11/irs-collection-notices-to-taxpayers-in.html?goback=%2Egde_3731046_member_181677636
The IRS is sending out a slew of collection notices to taxpayers who paid 100% of all taxes, 100% of all interest, and 100% of all penalties. Why is this happening?
If you owe money to the IRS, the first collection notice the IRS sends is known as a CP503. This letter is sent from something known as ACS (Automated Collection System). This letter tells you have a balance due with the IRS and you better pay within 30 days or make arrangements to pay it off in full. If you fall to respond, the IRS ACS will then send you a CP504. This letter will say “Notice of Levy.” It tells you you better respond in 30 days or else. If you do not respond ACS (or a revenue officer, if your case has been so assigned) will send you something known as a Final Notice of Intent to Levy. If you do not respond with a request for a Collection Due Process hearing, the IRS is now free to levy and garnish your wages, bank accounts, accounts receivables and even retirement accounts.
(then it goes on to explain)
Has anyone been able to view the video on TVO, “The Agenda with Steve Paikin: David Jacobson: One Election or Fifty-one*?” http://ww3.tvo.org/video/184394/david-jacobson-one-election-or-fifty-one
(I know I am behind the times; my computer is slow; when there is a lot of traffic, videos don’t work for me here – but they usually eventually do. So far nothing happens in trying to view the interview with our US Ambassador.)
*50 States plus Washington, DC? — how does he define “51″? Any mention of US Citizens Abroad?
Thanks very much to all of you who have commented on my email to the US Ambassador to Canada. I hope there will be a response. Holding one’s breath will make one dead.
@swisspinoy, I’ll do a follow-up letter if there is not a reply to my most recent correspondence, shown above. Yours is a great idea — I will have to think about how signatures to such a letter or email could be obtained.
In the meantime, I hope other Canadians here will communicate and hold David Jacobson to his word / provide us clear explanation. Who knows — he may feel that he doesn’t represent the said one million US Persons in Canada and doesn’t consider communicating with us within his mandate.
PS – There is a new post to Huffington: “5 Canadian Issues Facing the Next US President” http://www.huffingtonpost.ca/2012/11/03/us-election-canada_n_2068833.html No, our issue is not one of them.
@calgary
Thanks for your efforts to help all current and former USP’s abroad!
This YouTube link might work — you might want to watch if you need a brush-up on the electoral voting system (says ‘non-partisan’ in his role as US Ambassador to Canada, but Obama supporter):
*@Lioness, that sounds absolutely GHASTLY but am optimistic that it’s probably a glitch that can be sorted, just as others are saying.
Missed this opportunity to comment, on Cross country checkup on CBC today – topic was:
”
The U.S. election: Just days before Americans vote for the
next president of the U.S.A. it looks very close. Have you been
following the campaign?
How important is the outcome to Canada, and to Canadians?”
http://www.cbc.ca/checkup/episode/2012/11/04/sunday-on-cross-country-checkup-1/
Checked the transcripts. No mention of US extraterritorial taxation of Canadian citizens and duals, and permanent residents. No mention of taxation in general, or of FATCA.
*@Badger, it almost seems as though the papers and news media have been gagged by the powers that be…the silence is indeed deafening :/
@MonaLisa, it does make you wonder doesn’t it? That and the fact that it is very complex, and some journalists have no motivation to research it or write about it – as per the admission that one made – posted (by Just Me?) here recently.
But the silence of our officials is disheartening. We need their assistance and information on their intentions, in order to see how to proceed.
http://www.cbc.ca/news/canada/story/2012/11/03/pol-the-house-us-ambassador-to-canada-david-jacobson.html
…”The single most important thing the U.S. can do for Canada is to get its
economic house in order, says U.S. President Barack Obama’s
representative in Ottawa.”
Actually, the best thing the US can do for Canada is to stop laying its arrogant claims to the assets of those in Canada: and stop trying to double tax > 1 million dual Canadian-US citizens, permanent residents, green card holders, and snowbirds in Canada, and preventing them from investing their Canadian earned savings in Canadian registered plans due to punitive and draconian extraterritorial tax laws. Any success the US has with siphoning off resources and assets from those in Canada, is a loss to Canada’s economy.
@badger and monalisa,
The response that Just Me got from the journalist, David Macaray, http://isaacbrocksociety.ca/2012/10/29/david-macaray-columnist-at-the-huffington-post-gets-a-fatca-education/ is likely a representation of the US homelander interest in our plight. We’re, as many bankers abroad show, too much trouble. And, although, the US says otherwise, their actions tell me it is very punitive.
More disturbing to me, so I very much agree with you, is the “deafening silence’ from our own countries’ government representatives, our own medias (me just judging from how much of my correspondence with my country’s media (i.e., CBC articles), my country’s government (especially my own MP), as well as the US Ambassador to Canada is seemingly ignored).
I continue to not understand why this is NOT a bigger story. What is really going on behind what the public sees?
*calgary411, media companies and politicians have audiences or constituencies with whom they are mainly concerned, either to make advertising revenue or to get re-elected. Most apparently judge that their audiences aren’t interested in our situation, and in their eyes we ourselves are a tiny constituency. Too bad for us, but I think that’s just the way it is.
*Back in the spring when I first learned about this issue, I contacted every media source I could think of. I could not believe that nobody was talking about it. The only one to respond was CBC’s Go Public. A producer wrote back to say that they had considered doing a story on this issue, but could not get anyone to appear on camera. Understandable. I myself would be afraid to appear on camera as well.
@Marie,
You’re absolutely right — that is the reason given for not telling the story by CBC and other media.
But, is it the whole reason?
The Calgary Herald was very interested in my story and I, too, was not comfortable in putting myself (and my son) into the ‘spotlight’ before my renunciation. The Calgary Herald understood and said they would not want to jeopardize my US dealings leading up to my renunciation.
I was able to contribute to at least one story told in the US media. The US media, indeed, may be the ones to eventually break the dam on this issue as they start to realize the blow-back to their own banking system from the not-well-thought-through, cost-benefit analysis deficient FATCA, starting with Congressmen like Washington State’s David Reichert, as commented on by badger and Just Me.
http://www.mahanyertl.com/mahanyertl/congressman-rips-fatca/2652/
“Congressman Rips FATCA
@lioness Your story confirms our worst fears. I don’t believe you mention anything to do with FBARs. Have you filed these, and if so, what has the response been? It appears that all penalties so far have had to do with your late filing of income tax.
*I am trying to back and find it but I actually saw an article by US Tax lawyer last year that was very critical of Jacobson basically saying that everything he said was completely against stated policy coming out of the IRS and US DOJ.
*sorry,I have not returned answers… I have been travelling and in meetings. all these forms are overwhelming! here is what I do know: I do not own any TFSAs, or RESPs.in Canada. I filed 3 years in June, 2011 and in September, 2012, received the following penalties from the IRS:
I was given a civil penalty in 2008 for IRC sec. 6048(b) relating to From 3520-A for $10,000.
I was given a civil penalty in 2010 for IRC sec. 6048 form 3520, for $57,000. i intend to fight for the right to my freedom of speech. I do not owe any taxes in the United States. I have also looked at a few of the comments over the weekend and it is a sad day when we cannot speak the truth. I will be writing my letter within the next few days and will put a copy of it on this site. I just dont understand why we are being treated this way when we are law-abiding citizens. Canada is not a tax haven!
@Lioness
Forms 3520 and 3520A relate to Foreign trusts. Form 3520A is the form that the trustee of the plan is supposed to complete (and if they don’t you get the fine). Therefore you must own something that they are interpreting to be a foreign trust. Do you own an RRSP where a form 8891 was not filed?
Here is a post about TFSAs which does talk about the problem of the Foreign trust.
http://isaacbrocksociety.ca/2012/10/05/why-us-citizens-in-canada-should-not-invest-in-tfsas-or-any-other-foreign-trust-rrsps-excepted/
Suggestion: be very very careful about replying to them without knowing specifically what they are basing this on.
@lioness; you might consider contacting the Taxpayer Advocate Service for help:
http://usgovinfo.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=usgovinfo&cdn=newsissues&tm=5&f=00&su=p284.13.342.ip_&tt=2&bt=1&bts=1&zu=http%3A//www.irs.gov/advocate/index.html
Nina Olsen has been very critical in her reports to Congress of how the IRS is treating taxpayers abroad, and the service has been helping some of those abroad with their situations.
*
*renounceuscitizenship thank u for your comments. I do appreciate your input. I have completed all the forms and have been transparent. I do own an RRSP and have reported this. Why are we to be careful about replying re the truth?
badger – thank you. i will contact the taxpayer advocate service
@Lioness
What I mean when I say be careful is simply this:
You MUST understand exactly what these fines are based on. That said, you are always truthful in your reply. Your job is to request an abatement of penalties. I presume that you are asking for this abatement based on “reasonable cause”. You may want to read a bit about “reasonable cause” before writing your letter. That’s all I’m saying.